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  • Lavanya Gupta, Aaditya Mishra

Data Accumulation by Big Tech: Is the Indian Competition Regime Ready?

[Lavanya and Aaditya are students at Symbiosis Law School, Pune.]


Earlier this year, the CEOs of Google, Apple, Facebook, and Amazon (GAFA) testified at the US House of Representatives’ antitrust subcommittee. The six-hour-long hearing marked the culmination of the antitrust investigation that began back in June 2019. The four CEOs were questioned for their platforms’ tactics, which negatively impacted the market. While Google was investigated for leveraging its dominance in the online search market across other digital platforms, Facebook was questioned for its unabating acquisitions of potential competitors. The subcommittee catechized Amazon’s CEO about its use of third-party seller data to build competing products, and Apple was under scrutiny for its software and application distribution practices. Finally, early in October 2020, the House Judiciary subcommittee on antitrust released its 449 page-report suggesting that the four big tech giants enjoyed colossal power and could be broken up into smaller segments to preserve markets.

In the garb of ushering in innovation, low prices, and quality for consumers at the click of a button, the four big tech companies exploit consumers and competitors. Essentially, these companies collect (or buy) data, analyze it, and develop their products and activities to overshadow all other market players. The common thread running through the investigation of GAFA was their dominance in respective markets gained through data accumulation. Evidently, mature jurisdictions, like the US and EU, are grappling with the ill-effects of data accumulation by online platforms. In India, the activities of the four online giants are increasing at an unprecedented pace, and the time is just right for India to safeguard its future economy and market from being inflicted with similar anti-competitive issues. In this post, the authors firstly discuss the antitrust issues posed by GAFA’s assimilation of data and, secondly, the extant legal framework in India to tackle the issues presented by GAFA. The author concludes by succinctly arguing how it is essential to reform the current Indian competition regime to ward off antitrust challenges presented by GAFA’s data accumulation.

Antitrust Issues Posed by GAFA’s Data Collection

Though data is a non-monetary parameter, it is germane to the discussion of online platforms since all online platforms thrive on data. Data may be considered the “price” paid by users to access services of online platforms like their catalogues, search results, product notifications or customer base. Data collection by online platforms gives rise to practices like self-preferencing, price discrimination, and predatory pricing. For instance, using its lead in online search and advertising, Google has been in the news for pilfering data from third parties on its ad platform and increasing its own content tracti

on. Facebook and Apple have been in the light for their killer acquisitions. Blatant exploitation of data was seen when Amazon launched its home brands like AmazonBasics and Solimo to sell generic products for lower prices thus, eliminating their competitors, i.e., third-party sellers. In other words, GAFA has monopolized the respective digital spheres viz., online search, online shopping, social networking, and mobile and technology. Their functioning has diminished consumer choice, destroyed innovation and entrepreneurship, and undermined privacy. However, up until now, the big tech companies had escaped antitrust scrutiny due to the consumer-welfare yardstick used by competition watchdogs across the globe.

Extant Indian Legal Framework

In India, while there have been numerous complaints against Google, Apple, Facebook, and Amazon, the Competition Commission of India (CCI) has also suo moto ordered a probe into the companies’ activities. The big tech companies have been infamous for their anti-competitive practices in the Indian landscape. For example, time and again, Google has faced anti-competitive allegations in India, which have ranged from search bias and unfair advertising policies to preferential promotion of its apps. These are precisely the allegations being looked into by the US antitrust committee as well.

Back in 2011, in Sonam Sharma v. Apple Inc., the complainant had alleged that Apple was abusing its dominant position in the smartphone market to force iPhone users to opt for only particular network providers. While determining the relevant market, the Indian competition regulator was of the view that iPhones cannot be demarcated into a separate product market, and accordingly, the complaint was dismissed. In stark contrast, the first step towards big data jurisprudence in India was taken in Umar Javed v. Google LLC, wherein CCI recognized that iPhones constitute a separate product market altogether, different from Android products. CCI’s belated recognition of the architecture of the twenty-first-century marketplace is a welcome move; however, CCI must ensure to set the antitrust benchmarks high and control the market failures induced by GAFA without losing any more time.

On the legislative front, Section 19 of the Competition Act 2002 (Act) empowers the CCI to inquire into any allegations of anti-competitive practices that violate Section 3 or Section 4 of the Act. Section 19 also lays down the factors to be regarded by CCI during any inquiry and investigation. However, none of the parameters seems to address the power possessed by data-opolies. Additionally, India follows an ex-ante merger review wherein assessment is done based on the factors laid down under Section 20(4) of the Act. Nevertheless, the parameters are the same for traditional companies as well as technology companies. Consequently, the Act does not equip CCI to differently consider data-driven companies that have a non-traditional impact on the market and consumers.

The Competition Law Review Committee Report (CLRC Report) noted that the definition of ‘price’ under Section 2(o) of the Act is wide enough to encompass personal data and preferences revealed to the digital market players. Further, the committee believed that Section 19(4)(b) that lays down the parameters to assess the dominance of firms, which include ‘resources of the enterprise’, is wide enough to include control over data. Section 19(4) was also regarded as being inclusive enough to consider ‘network effects’ as a relevant factor for determining a firm’s dominance. Though the CLRC Report is a step in the right direction, however, pending CCI’s approval and application of the recommendations, the suggestions are merely a show.

Learning for the Indian Competition Regime

Back in 2017, the European Commission imposed a hefty fine on Google after it violated the EU’s antitrust law by manipulating search results to give primacy to its own products. With the US Congressional Hearing, a much-needed push has been given to the need to look at the anti-competitive practices of the big tech companies. The Facebook-Jio deal and the upcoming Amazon-Jio deal are critical red flags that CCI must acknowledge at the earliest possible.

In this age and day of data, non-monetary parameters must be given equal consideration as the monetary parameters. Users pay for digital products with their money as well as data. In addition to focusing on the monetary costs to the users, competition regulators, including CCI, should also consider whether users are being asked for more data than is strictly necessary, or whether the information is being collected in intrusive or abusive ways, and whether customers are getting the requisite value for the data they share. Moreover, restricting the scrutiny under competition law only because the consumer is receiving price and output benefits will be harmful in the longer run. Under the competition regime, a paradigm shift is required in terms of the ‘consumer welfare’ yardstick; the test needs to be more inclusive of parameters like data. CCI can also adopt a presumption-based approach, especially to assess e-commerce platforms. Under the suggested approach, there shall be a presumption of predation as soon as platforms are found to be pricing their products below-average costs or market costs. CLRC’s suggestion to penalize the mere attempt to monopolise the relevant market where a particular product or service is sold is a step in the same direction. The time in India is just ripe to curb the practices at their nascent stage before Indian markets and consumers grapple with deep-rooted issues in the online market.

GAFA entered the market with their key innovations but have become powerful monopolists that create competition barriers. Being the most valuable publicly-traded companies in the world is no excuse to ill-treat workers, disrupt markets, and exploit user data. GAFA’s ever-increasing revenue is only going to make the companies stronger, and market competition weaker.

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